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26 February 2014

Kathimerini: Preliminary deal on bank needs


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Bank of Greece Governor Giorgos Provopoulos and Troika representatives reached a deal on the main parameters for the assessment of the capital needs of banks during their first meeting, though some secondary technical details still need to be ironed out, according to sources.


The BoG and the Troika have agreed that the completion of the recapitalisation should rely on the basic (and not the adverse) scenario of economic conditions, and that banks should retain a capital adequacy index of 8 per cent, despite the different approach of the two sides over the mode of calculation. The disagreement concerns the actual financial impact of potential losses from bad loans, which leads to a difference of €2 billion, as the BoG estimates the capital needs of the Greek credit sector around €6 billion, while the Troika puts them at €8 billion.

The central bank presented on Wednesday its detailed positions on the stress tests conducted by BlackRock late last year and said that the report on their results would be issued on Tuesday, March 4. The Troika asked for a few days for its technical teams to examine the methodology. BoG sources said the issue of capital needs cannot remain open – especially after suggestions about requirements of €20 billion – and stressed that the report will definitely be published by Friday, March 7.

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Ministry officials insist that any attempt to tap the global markets will only take place in the second half of the year, but sources close to the prime minister have not ruled out the possibility of a bond issue even before the May European and local elections. Regardless of when that attempt takes place, Athens will first have to persuade its creditors that it will be successful. The Troika disagrees on Greece’s return to the markets, using the argument that the economy still lacks the conditions for a successful bond issue.

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Prime Minister Antonis Samaras declared on Wednesday that Greece could bring in €150 billion in much-needed state revenue over the next 30 years through the exploitation of its undersea energy deposits.

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© Kathimerini


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